Question
$2500.00 is invested per year in an IRA each year 10 years. The interest rate was 7% compounded annually. At the end of 7 years,
$2500.00 is invested per year in an IRA each year 10 years. The interest rate was 7% compounded annually. At the end of 7 years, she ceased the IRA payments but left the total of the investment at 6% compounded annually for the next 25 years.
a) what was the value of her IRA investments at the end of the 10 years?
b) what was the value of her IRA investments at the end of the next 25 years?
For A, I used FV=PMT(1+i)^n-1/i formula for 7 years at 7 % then calculated 3 years at 6 % ( 10 years )
But for B I am curious if n is 25 or 22? using the P(1+i)^n formula
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